O R I G I N A L A R T I C LE

The effect of unions on the distribution of wages of hospital-employed

registered nurses in the United States
Joanne Spetz, Michael Ash, Charalampos Konstantinidis and Carolina Herrera

Aims and objectives. We estimate the impact of unionisation on the wage structure of hospital-employed registered nurses in the
USA. We examine whether unions have an effect on wage differences associated with race, gender, immigration status, education and experience, as well as whether there is less unexplained wage variation among unionised nurses.
Background. In the past decade, there has been resurgence in union activity in the health care industry in the USA, particularly
in hospitals. Numerous studies have found that unions are associated with higher wages. Unions may also affect the structure of
wages paid to workers, by compressing the wage structure and reducing unexplained variation in wages.
Design. Cross-sectional analysis of pooled secondary data from the United States Current Population Survey, 20032006.
Method. Multivariate regression analysis of factors that predict wages, with models derived from labour economics.
Results. There are no wage differences associated with gender, race or immigration status among unionised nurses, but there are
wage penalties for black and immigrant nurses in the non-union sector. For the most part, the pay structures of the union and
non-union sectors do not significantly differ. The wage penalty associated with diploma education for non-union nurses
disappears among unionised nurses. Unionised nurses receive a lower return to experience, although the difference is not
statistically significant. There is no evidence that unexplained variation in wages is lower among unionised nurses.
Conclusions. While in theory unions may rationalise wage-setting and reduce wage dispersion, we found no evidence to support
this hypothesis.
Relevance to clinical practice. The primary effect of hospital unions is to raise wages. Unionisation does not appear to have
other important wage effects among hospital-employed nurses.
Key words: hospitals, industrial relations, nursing, wages
Accepted for publication: 25 November 2009

Introduction
Unions that represent health professionals have become
increasingly important in the employment and political
landscape of the USA. Nearly 21% of registered nurses
(RNs) in the USA were unionised in 2003 (Terlep 2006).
In recent years, nursing unions have claimed credit for
wage increases across the USA, hospital worker safety
improvements, implementation of minimum nurse-toAuthors: Joanne Spetz, PhD, Professor, School of Nursing, University
of California, San Francisco, CA; Michael Ash, PhD, Associate
Professor, Economics and Public Policy, University of Massachusetts,
Amherst, MA; Charalampos Konstantinidis, MA, Doctoral
Candidate, Department of Economics, University of Massachusetts,
Amherst, MA; Carolina Herrera, MA, Statistician, School of
Nursing, University of San Francisco, CA, USA

60

patient ratios in California, and the introduction of federal

minimum staffing legislation in Congress (California Nurses
Association 2009). Hundreds of research studies have
established that unionised workers in any sector earn more
than their non-union counterparts (Lewis 1986), and this
finding has been corroborated in studies of nursing
employment (Link & Landon 1975, Fottler 1977, Feldman
& Scheffler 1982, Bruggink et al. 1985, Hirsch &
Schumacher 1998).
Correspondence: Joanne Spetz, Professor, University of California,
San Francisco Center for the Health Professions, 3333 California
Street Suite 410, San Francisco, CA 94118, USA. Telephone:
415 502 4443.
E-mail: jojo@thecenter.ucsf.edu

2010 Blackwell Publishing Ltd, Journal of Clinical Nursing, 20, 6067

doi: 10.1111/j.1365-2702.2010.03456.x

Original article

Hospital unions and the nurse wage distribution

In addition to raising wages, unions may also affect the

structure of wages paid to workers. Freeman and Medoff
(1984) argue that unions compress the wage structure as an
expression of solidarity and worker preferences. In this paper,
we examine the impact of unionisation on the wage structure
of hospital-employed RNs in the USA. We focus on two
factors: wage differentials associated with age, gender,
education and experience; and unexplained variation in
wages, measured as residual wages. We find little evidence
that unions have an effect on the wage structure of RNs.

Background
In the past decade, there has been resurgence in union activity
in the health care industry in the USA, particularly in
hospitals. Of 24 million RNs employed in the USA in 2003,
unions represented about 472,000, or nearly 21% (Terlep
2006). This rate is over five percentage points higher than for
all workers in the USA (Clark & Clark 2006). Membership of
hospital-employed RNs in unions in the USA was stable at
about 18% from 1983 through the mid-1990s, and grew
rapidly since that time (Fig. 1). The apparent volatility in the
rate of unionisation reflects sampling variation; the error
bands are wide enough to make the spiky series consistent
with the smoothed results, which are available from the
authors on request. During the first six months of 2000,
health care unions, including unions for nurses, service
workers and other healthcare employees, won organising

Union density
021

Per cent unionised

020

019

018

017

016

1985

1990

1995

2000

2005

Year
Figure 1 Per cent of hospital-employed registered nurses who are
union members.

elections at a rate of 617%, compared with a 339% rate for

manufacturing (Forman & Davis 2002).
Unions represent the collective interests of employees in
negotiating the terms and conditions of employment with
employers and thereby affect many aspects of the employment relationship. Unions typically seek better working
conditions for their members, including higher wages, more
employment security and improved terms of hiring, promotion and layoff (Baumol & Blinder 1991). They bargain with
employers over the distribution of profits (or net revenues in
the case of non-profit or public entities). Many studies of
workers in all industries have found that unions are associated with higher wages and fringe benefits (Mellow 1979,
Lewis 1986, Freeman & Kleiner 1990, Jakubson 1991,
Wunnava & Ewing 1999, Hirsch & Schumacher 2001).
Research on nursing employment also has found that
unionisation is associated with higher wages (Link & Landon
1975, Fottler 1977, Becker 1979, Sloan & Steinwald 1980,
Feldman & Scheffler 1982, Bruggink et al. 1985, Hirsch &
Schumacher 1995, 1998). Some studies find that unions affect
wages received by non-union workers (Lewis 1990, Hirsch &
Schumacher 1998).
Because unions bargain for wage contracts that affect all
nurses in their bargaining unit, they also may address
differences in earnings that arise from differences in seniority,
education or other worker characteristics (Freeman &
Medoff 1984). Unions may increase some earnings differences, such as by negotiating career ladders that provide
automatic returns to seniority, and collapse others, such as by
limiting the importance of supervisor evaluations in determining pay. Freeman (1980) reported that unions contributed
to reductions in wage differences between white-collar and
blue-collar workers in firms. In a later study, Freeman (1982)
again found that within-employer wage dispersion was much
smaller in unionised establishments, and attributed this to
intentional differences in wage practices. For example,
unionised employers were more likely to increase wages
based on automatically progressing scales rather than based
on individual merit reviews. Other studies (Hirsch 1982,
Belman & Heywood 1990, Lemieux 1998) also found that
unions reduced wage differences associated with observed
measures of employees skills.
Unions may have an ambiguous effect on the wage
structure of nursing. On the one hand, standard solidaristic
pay-compression arguments may dominate. On the other
hand, if hospitals exert significant monopsony power in
nursing, then union wage strategy may address the monopsonistic pay structure (Yett 1975, Sullivan 1989, Staiger et al.
2010). Under monopsony, employers focus as much as
possible on attracting the marginal nurse, e.g. with hiring

2010 Blackwell Publishing Ltd, Journal of Clinical Nursing, 20, 6067

61

J Spetz et al.

bonuses or other disproportionate escalation of starting

salaries. Because monopsonistic firms focus on the marginal
worker while unions represent the interests of all workers,
union strategy in the face of a monopsonistic pay structure
may attempt to reward nurses with more job attachment.
Thus, nurse advocates prominently criticise the lack of career
ladders or skill-based pay scales (Queneau 2006), the absence
of which is consistent with monopsonistic strategy on the
part of the employer. In addition to the monopsonistic
explanation, other advocates have attributed limited career
ladders to traditional feminisation of the profession (ApesoaVarano & Varano 2004). Both the gender and monopsonistic
explanations are consistent with weak rewards to experience
resulting in high turnover and exit. The introduction or
steepening of career ladders tends to decompress the wage
structure for nurses. The predicted union effect on the wage
structure is thus ambiguous.

Methods
Data
Our source of data on nurses is the merged outgoing rotation
groups of the 2003 through 2006 Current Population Surveys
(CPS), which is collected by the United States Bureau of
Labor Statistics. Union membership data were first collected
on a regular monthly basis beginning with the 1983 CPS.
From the CPS, we extracted all RNs (Census Occupation
Code = 3130) working in hospitals (Census Industrial
Code = 8190) whose incomes were directly reported (and
not imputed). Although the CPS is in principle a longitudinal
dataset, with each participant appearing twice in the outgoing rotation group, we ignore the repeated observations, both
in terms of identification (Hirsch & Macpherson 2000) and
in terms of clustered errors. The CPS sample used for this
analysis, after applying restrictions described later, had 831
RNs who were unionised and 3403 non-union nurses.
Because we pool nurses from multiple years of the CPS,
there is not a straightforward comparison of the sample size
to the national population of RNs, but the unionisation rate
and the share of RNs employed in hospitals is consistent with
other data sources, such as the 2004 National Sample Survey
of Registered Nurses (Health Resources and Services Administration 2006).
The hourly wage for RNs is computed as usual weekly
earnings divided by usual weekly hours. We use the CPI-URS, a time-consistent measure of the US consumer price level,
to convert all values to real 2006 dollars. Educational
attainment was based on credentials received by nurses;
however, we cannot observe whether the completed degree
62

was in the field of nursing. We code nurses with no degree

beyond secondary as Diploma nurses and other nurses by the
highest degree attained. We used potential experience i.e.
age minus six minus years of education as a proxy for years
of work experience.
We applied the following additional restrictions to our
sample. In addition to requiring that all necessary variables
be available for all observations, we restricted the sample to
nurses who usually worked at least 20 hours per week, and
whose real hourly earnings fell between the Federal minimum
wage and $100 per hour (in 2006 dollars).

Analysis
To measure the impact of unions on the wage structure of
nurses, we estimate two multivariate ordinary least squares
equations one for unionised nurses and one for non-union
nurses. The dependent variable in these equations is the
natural logarithm of computed hourly wage. The explanatory
variables include human capital and demographic characteristics: education, experience and experience squared, gender,
race/ethnicity, and immigrant status. We also control for the
region of the USA where the nurse lives, which is measured
with a set of dummy variables. There are nine regions, each of
which we subdivide into two sub-regions one for rural
residents and one for urban residents. Thus, we have 18
regions, represented by 17 dummy variables in the equations
(urban northeast is the excluded region). Finally, we include
three dummy variables to control for each year of data, with
2003 as the omitted year.
After estimating the two equations, we first compare the
values of key coefficients between these equations using
t-tests to learn whether there are significant differences in the
effect of selected variables on wages. We focus on how
unionisation status affects pay differences that are widely
observed: gender, racial/ethnic, educational and seniority.
Second, we examine wage variation and residual wage
variation by union status. We compare the R-squared values
of the equations, which measure the amount of variation in
the data explained by the wage equations. We also compare
the distributions of residual wages from the equations, thus
explicitly assessing whether there is greater unexplained
variation between union and non-union RN wages.

Results
Table 1 presents characteristics of union and non-union
RNs employed in hospitals, with data from 20032006
combined. Average hourly earnings are substantially higher
for unionised nurses. Union and non-union RNs are both

2010 Blackwell Publishing Ltd, Journal of Clinical Nursing, 20, 6067

Original article

Hospital unions and the nurse wage distribution

Table 1 Characteristics of union and non-union registered nurses

employed in hospitals, 20032006

Real hourly earnings

Female
Immigrant
Urban location of residence
Non-hispanic white
Black
Hispanic
Other
Diploma
Associates degree
Bachelor
Masters
Doctorate
Age

Union

Non-union

$3350
911%
189%
856%
719%
67%
52%
162%
47%
371%
504%
54%
23%
4285

$2820
924%
101%
800%
825%
60%
35%
80%
47%
404%
490%
43%
16%
4117

overwhelmingly female, and their age and educational

profiles are similar, with slightly more Associate Degree
nurses in the non-union group. Unionised RNs are much
more likely to be immigrants (189 vs. 101%) and more
likely to be non-white (281 vs. 175%). They also are more
likely to live in urban locations (856 vs. 800%). These data
suggest that wage differentials between union and non-union
RNs could arise from differences in location, race and
education, as well as from the impact of unions themselves.
Table 2 reports coefficients from the ordinary least
squares regressions of the natural logarithm of real hourly
wage on human capital and demographic characteristics for
unionised and non-unionised RNs. Among unionised nurses,

wages are higher for nurses with bachelors and masters

degrees, when compared to those with associate degrees. As
expected, wages increase with experience, but at a diminishing rate. There are no differences in wages associated
with gender or immigrant status, and the only race/ethnicity
gap is for Hispanic nurses, who earn a lower wage than
non-Hispanic white nurses.
The second column of Table 2 provides coefficients for
non-union nurses. As with unionised nurses, wages are higher
for nurses with bachelors and masters degrees; however,
among non-union nurses, diploma-educated nurses experience a wage penalty when compared to those with associate
degrees. Wages increase with experience, but at a diminishing
rate. There is no gender difference in wages. Non-union
immigrant nurses and black nurses earn significantly less than
do non-immigrant and non-Hispanic white nurses.
The last column of Table 2 provides the differences
between the coefficients of the union and non-union equations, and the standard errors of these differences. The
standard errors are generally large. The only coefficient that
is significantly different between the union and non-union
equations is that for the diploma-education indicator.
Unionised diploma nurses earn substantially more than do
non-union diploma nurses. Note that the R-squared values of
the equations are quite different; 27% of variation in wages is
explained in the union equation, while only 19% of variation
is explained in the non-union equation.
The age-earnings profile in the union sector is presented in
Fig. 2. Because the age-earnings specification is quadratic in
potential experience, the most straightforward way to

Table 2 Coefficients from multivariate regression equations for registered nurse (RN) wages, 20032006 (standard errors in parentheses)
Unionised RNs
Female
0030 (0037)
Immigrant
0020 (0048)
Race/ethnicity (non-hispanic white omitted)
Black
0035 (0069)
Hispanic
0108* (0058)
Other
0024 (0046)
Education (Associates degree omitted)
Diploma
0075 (0060)
Bachelor
0083** (0027)
Masters
0237** (0053)
Doctorate
0063 (0087)
Potential experience
0017** (0005)
Potential experience squared
00003** (00001)
R-squared
027
n
832

Non-union RNs

Difference (unionnon-union)

0005 (0024)
0064** (0030)

0026 (0044)
0084 (0057)

0068** (0032)
0042 (0042)
0043 (0034)

0033 (0076)
0066 (0071)
0019 (0058)

0053* (0028)
0074** (0012)
0197** (0033)
0045 (0047)
0019** (0002)
00003** (000004)
019
3404

0129** (0066)
0008 (0029)
0040 (0063)
0018 (0099)
0002 (0005)
000002 (00001)

Dummy variables are included to control for year and for region.
*Significant at 010.
**Significant at 005.

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63

J Spetz et al.
Ageexperience profile, by union status
025

Non-union

020

Histogram of residual log wage, non-union

1500

015

Union

1000

Frequency

Wage increase

010

500

005

000

10

15

20

25

30

35

15

Experience

05

00

05

10

15

Residual log wage

interpret the difference is through the plot of the predicted

experience premium. The profile is somewhat flatter than in
the non-union sector, which suggests that unions might
compress earnings of older and younger nurses. The difference in profiles accounts for approximately 5% of wages at
their peak at approximately 30 years of experience. The
flatter wage profile in the union sector runs contrary to the
hypothesis that career ladders are a union goal. The result is,
however, consistent with union compression of pay scales.
The result is also consistent with differential attrition in the
union and non-union sectors: if high pay is required for the
long-term retention of nurses in the non-union sector, then
the steeper age-earnings profile for non-union nurses might
simply indicate that all of the lower-wage nurses exit the
field over time.
We examine the overall distribution of wages in the union
and non-union sectors. The standard deviation of the logarithm of wage is a standard measure of dispersion. The nonunion and union sectors have very similar standard deviations
of log wage, 0305 and 0326, respectively, which suggests
that wage compression is not a strong force in the union
sector. The similarity persists in the standard deviation of
residual log wage or the dispersion of wages after accounting
with regression for characteristics that typically determine
wage differences. The standard deviation of residual log
wage or the standard error of the regression is 0275 in the
non-union and 0280 in the union sector. Histograms of
residual log wage in the two sectors appear in Figs 3 and 4;
the similarity in the distributions suggests that wage compression is not an important feature of unions in nursing.

Figure 3 Histogram of residual log wages for non-union registered

nurses, 20032006.

Histogram of residual log wage, union

300

200

Frequency

Figure 2 Experience-earnings profiles of union and non-union registered nurses, 20032006.

64

10

100

15

10

05

00

05

10

15

Residual log wage

Figure 4 Histogram of residual log wages for union registered nurses, 20032006.

Discussion
This analysis provides mixed evidence regarding whether
unions have an effect on the wage structure of RNs. We find
little evidence that there are differences in wages associated
with gender, immigrant status, race/ethnicity, education or
experience. Although wage equations indicate that immigrant
and black non-union RNs face a wage penalty, while unionised

2010 Blackwell Publishing Ltd, Journal of Clinical Nursing, 20, 6067

Original article

immigrant and black nurses do not, the differences in these

coefficients between the union and non-union equation are not
statistically significant. We also find little evidence supporting
theories about the role of unions in wage rationalisation.
The nursing workforce is relatively homogeneous when
compared with other professions; all nurses have reached an
educational standard and hold a licence to practice, and it is a
predominantly female profession (Queneau 2006). Nickell
(1977) notes that in the long term, wage differentials among a
homogeneous group of workers should be related solely to
differences in employer characteristics such as working
conditions, and products or services provided. In the case
of nurses, it is arguable that there should be little wage
dispersion, and thus it is unlikely that unions could have an
impact on the wage structure. In an analysis of blue-collar
workers, Macpherson and Stewart (1987) found little
evidence that unions have an impact on the dispersion of
wages of women. In his study of Australian workers, Borland
(1996) associated declines in union density with increased
earnings dispersion among males, but not among female
workers. Our work found no significant associations between
unionisation and the impact of education and gender on
wages, with the exception of a wage penalty for nonunionised diploma nurses. This penalty may be linked to
occupational skill level.
Occupation or skill level also might be associated with the
impact of unions on the wage structure. Using disaggregated
data from the United States Current Population Survey, Card
(1996) determined that unions increase wages more for
workers with lower skill than for those with greater skill.
Although our study did not directly measure nursing skill, it did
examine nursing experience and nursing education, with
results that have some consistency with those of Card
(1996). We found that non-unionised diploma nurses suffered
a significant wage penalty, whereas unionised diploma nurses
did not.
Unions may be protective for workers who otherwise might
face a wage penalty. Several studies have demonstrated that
discrimination is more likely to occur in less competitive or
monopolistic industries. Peoples (1994) examined racial wage
differentials and found that racial wage gaps were larger
among non-union workers in non-competitive industries,
when compared with competitive industries. In a later study,
Agesa and Monaco (2006) demonstrated that the wage gap
between whites and minorities was larger in monopolistic
industries than in competitive industries for non-union
workers and that unexplained wage residuals were smaller
in competitive industries. Their analysis suggested that unions
protect workers from the discrimination observed in monopolistic industries. To the extent that the hospital industry is

Hospital unions and the nurse wage distribution

non-competitive or monopolistic, as some research has

suggested (Abraham et al. 2005), we would expect the racial
wage gap to be smaller among unionised nurses. Indeed, in
our analysis, there are wage penalties for non-union black and
immigrant nurses, while racial wage differences are insignificant at the 5% level among unionised nurses.
Unions may rationalise wage-setting, leading to fewer
unexplained differences in pay. This hypothesis is not
supported by an examination of the residual log wages from
the regression equations. However, there is a modest indication of more transparently structured pay in the union sector:
the R-squared for the non-union sector is 19%, while the
R-squared for the union sector is 27%. These results are only
weakly consistent with those of the classic work of Freeman
(1980 and 1982), who found strong evidence that unions
reduce wage dispersion and rationalise the wage structure.
Our focus on a single workforce and economic sector also
may explain the different findings between this study and
previous work. In previous studies of the impact of unions on
wage dispersion, researchers have typically examined crossindustry data or cross-occupation data. For example, Freeman
(1980) focused on differences between blue-collar and whitecollar workers in firms. Subsequent research has demonstrated
that there may be differences in the effect of unions on the wage
structure according to industry and occupation (Freeman
1982, Hirsch 1982, Macpherson & Stewart 1987, Peoples
1994). More work needs to be carried out on single-sector
unionisation and on the differences between manager and nonmanger nurses in a unionised environment.

Conclusion
Wage differentials can reflect rewards provided to nurses
with greater skill and knowledge; however, they also might
be associated with discrimination and monopsonistic wagesetting practices. In addition to striving to raise wages,
hospital unions also might seek to change the variation in
wages. We find weak evidence that unions reduce wage
differences associated with race and immigration status and
some additional evidence that wages are more closely
associated with the collective set of observable factors among
unionised nurses. We also find some indication that the wages
of unionised nurses rise more slowly with experience than do
the wages of non-union nurses.

Relevance to clinical practice

Unions are a method of exercising collective voice about the
workplace. Some RNs may want steeper career ladders to
reward skill and to combat traditional stereotypes of nursing

2010 Blackwell Publishing Ltd, Journal of Clinical Nursing, 20, 6067

65

J Spetz et al.

as a profession without opportunities for advancement.

Other RNs may prefer pay compression to support professional solidarity. The collective representation provided by
unions can reflect these complex preferences. The mixed
empirical results are consistent with this complexity and
certainly call for further and more detailed study of the
micro-operation of nurses unions.
Nurse interest in unions may grow if nurses believe their
wages are set unfairly. To the extent that the race and
immigrant wage differences we measured among non-union
nurses are real and perceived by nurses, there is motivation to
seek remedy to such discrepancies. This is one of many factors
driving increased unionisation among nurses (Clark et al.
2001). Unionisation efforts have been particularly successful in
hospitals and among nurses. Union elections are more likely to
be successful in workplaces where women account for 75% or
more of the workforce, women are in leadership positions, and
women of colour are in positions of influence (Bronfenbrenner
2005). The relatively homogeneous, cohesive nature of the
nursing workforce naturally lends itself to strive to ensure
that there are equitable wages in the workplace.

Acknowledgements
The authors acknowledgement support from Grant-in-aid for
Scientific Research (B: principal investigator Yoshifumi
Nakata) by The Japan Society of Promotion of Science and
Grant for International Collaborative Research (principal
investigator Yoshifumi Nakata) by Pfizer Health Research
Foundation. The authors thank Jean Ann Seago and Jennifer
Kaiser for their support and comments in the process of
writing this paper.

Contributions
Study design: JS, MA, data collection and analysis: MA, CK,
JS and manuscript preparation: JS, MA, CH.

Conflict of interest
The authors have no competing interests associated with this
manuscript.

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